Modern money apps like Venmo, Cash App, and Zelle have taken the world by storm. The inconvenience of not having money to split the check at dinner, or the stress of delivering a check to your landlord in time to pay the rent each month, is a thing of the past.
In today’s world, we find ourselves paying our peers through these apps on a weekly basis, and financial institutions have partnered with them to make the process even easier. As technology advances, these platforms will also evolve as they become more integrated into our daily lives.
While these apps are incredibly convenient, their growing popularity also poses a threat to your financial security. Unfortunately, people can try to take advantage of you or the technology, so you need to educate yourself. Below, we’ve shared some common scams and misconceptions about using these platforms, as well as helpful ways to protect yourself from fraud.
The type of attacks fraudsters use to defraud individuals change daily, but here are a few scams we should be aware of and see happening most often.
▪ Employee Impersonation:
Fraudsters have learned to spoof numbers to make it look like someone from your financial institution is calling you to investigate suspicious activity, asking for your debit card and PIN, or online banking credentials.
There is never a time when CommunityAmerica will contact you for this information, as we already have access to it in our system. It is important that you never provide this information to an unknown source, either over the phone or via email. If you are unsure if the request is legitimate, hang up and call us on your own. This will ensure that you are in contact with an actual CommunityAmerica Credit Union employee.
▪ Facebook Marketplace Scams:
This scam targets people selling items on Facebook Marketplace, which typically uses these apps to collect or send payments for their items. A buyer will contact you, luring you in by pretending to be interested in purchasing your item for sale. Once you have established how they will buy the item, they will most often overpay you. In return, they will then ask you to refund their overpayment before you can even access or verify the payment.
You will then receive a fraudulent email that appears to be from the app you are dealing with, confirming what the fraudster explained to you: that the buyer overpaid and that you agree to refund everything overpaid before accessing your fund. The catch is that the payment they sent you isn’t legit, which leads to their goal of “reimbursing” you a certain amount, but never receiving payment in your account.
The best way to spot this scam is to hover over the email address sending you the overpayment email. Although the content of the email may seem legitimate, confirming the email address will allow you to see if it is a fake account. Fraudulent emails are usually sent from an AOL or Gmail account.
If you are ever unsure whether a transaction or communication within an app is legitimate, you can always contact the app itself for advice and verification. Remember that if someone is really overpaying you, they can dispute that amount on their own.
▪ Kitten/Puppy Scams:
This specific scam involves a fraudster claiming to be selling kittens or puppies online. They often ask for a deposit or payment and then you, the buyer, never receive the animal.
It is always best to meet a seller in person to verify that there is an animal for sale. We suggest making these types of purchases through vendors you know and trust.
Users often underestimate the advantage of scammers when transferring money in these apps. Here are some common misconceptions people have about fraud:
▪ Assuming you can report fraud and get your money back: While you can report fraud or dispute a charge, there’s no guarantee you’ll get the funds back.
▪ Assuming the app or platform cancels the payment: Even if you send money to the wrong person, these apps cannot cancel your payment because you authorized the payment.
▪ Do not consider these applications as real money: these types of payments are equivalent to cash. Once your funds are sent, you probably won’t be able to get them back.
While apps and financial institutions make diligent efforts to protect their members, it’s always wise to do your due diligence to protect yourself from perpetrators.
How to protect yourself
As mentioned earlier, the best way to secure your finances when using these apps is to be mindful of your situation.
Here are some other ways to avoid falling victim to a financial scam:
▪ Meet the seller in public.
▪ Do your research and read the seller’s online reviews.
▪ Consider alternative payment methods, such as cash.
Here are some questions to consider before sending money through one of these apps:
▪ Is this offer out of the ordinary, or is it too good to be true?
▪ Does this offer require me to send money to someone I don’t know?
▪ Am I being asked to return money in any way and for any reason?
If you answered yes to any of these questions, it’s a good sign that you should halt the trade to do further research.
While these modern financial apps can make our lives easier, learning how to use them safely can save you from becoming a victim. Visit our Empower Blog to learn more about fraud protection.
“Let’s Talk Money” is powered by CommunityAmerica Credit Union and this week’s article comes from anti-money laundering investigator Amanda Roberts.
This story was originally published August 24, 2022 5:00 a.m.